Bad Employment News Mean We’re Getting Closer to the Market Crash

Sometimes it feels like we’re caught in a bad zombie movie. No matter what we do, the undead keep standing back up and lurching toward us.

Look, the U.S. economy is not dead. But it’s not healthy either. So the Fed keeps shooting it full of crack that brings a quick high, then fails.

But eventually those highs don’t go as high or last as long. And like all good zombie movies, the survivors eventually succeed in getting the dead to stay dead.

Personally, I want the movie to end, because frankly I’m getting tired of it. My popcorn is stale and my soda is down to just ice.

The good news is, the bad news seems to be picking up steam. Finally. That’s a sign that we’re nearing the end. Just like in the movies, the really bad things seem to happen just before the tables turn….

On July 6 the Bureau of Labor Statistics (BLS) released the numbers and they were horrible… 80,000 jobs created on expectations of over 100,000 jobs… in an economy that needs 125,000 to150,000 jobs each month just to keep up with the growing labor force.

Then the employment news got worse. The birth/death adjustment, where the government “guesses” at how many jobs small businesses create, showed a gain of 124,000.

The thing is, the Bureau had already added that number to reach the 80,000 jobs gain. That means the real number of jobs the BLS actually counted was -44,000.

Now, if the BLS had reported the true figure of -44,000 instead of its guessed-at 80,000, there would have been blood in the streets!

That’s OK. We know the truth because we watch the employment reports. And the truth is things are bad, and getting worse.

But we need it. We need the process of shedding the bad stuff so we can get down to the good parts of our economy and begin moving forward. Just like when you eat bad fish, your body needs to flush all the nastiness out before you feel better. When your body can’t get rid of the toxins, you die… and become a dead man walking.

The more we hang on to the notion that things will get better if we only wait a little longer, or if we only create a little more money, or if we maybe just have one more “save-the-broke-homeowner” program, the deeper in trouble we become.

The problem is, while we have been trying this program Rome has been burning. We are on the fourth year of $1 trillion-plus deficits. Home Prices are off by over 30% and have flat-lined. Food prices are up. Wages depressed. And yes, we still have millions of unemployed.

It’s Time… Be Prepared

Our economy is flagging. Tax rates hang in the balance as the December 31st deadline looms over our heads. Elections present us with two candidates, neither of whom can solve the crisis we face. The euro zone disintegrates more every day.

Any one of these problems by itself is difficult. But altogether?

Mark my words. We’re getting close. The great crash is coming.

And if you’ve been following our recommendations, you’ll be well prepared to weather the effects of the crack-head detox or bad-tuna flush (whatever you want to call it, it’s going to be ugly) ahead.

We’ve planned for this eventuality. Our Boom & Bust portfolios and our guidance have been built around the notion that things will get worse before they get better. That’s why we’ve preached caution and income.

Those who are with us should be in a good position to survive and prosper as events unfold.

Harry

Ahead of the Curve with Adam O’Dell

Why You Won’t Hear Us Say There’s a Recovery

While the U.S. economy has been adding jobs, on and off, since January 2010… we still have a long way to go. That’s because there are still at least four million jobs that have not been restored since the peak employment numbers we saw back in 2007.

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.